Forum Archive Index - September 2000

[Brian Gale <brigale@i4free.co.nz>]

Thanks Peter

I note in particular ' trading is hazardous to your wealth " Para 6 below

Probably this is the mistake many of us make, we become easily diverted 
from our original convictions and jump in and out of stocks often to our 
detriment. Of course it would take a great deal of patience to stick with a 
stock for 5years or even one or two for that matter.  But the message comes 
from many directions that patience is the key, to be able to weather the 
inevitable market fluctuations and providing the original choice was sound 
and nothing has dramatically changed we should win in the long run. The 
dividends we pick up along the way should keep us smiling.

We are the doldrums at the moment, but personally I am not very concerned 
as most of my holdings I regard as long term.  Just got to keep away from 
temptations.

Regards
Brian

At 11:54 19-09-00 +1200, you wrote:
>Mark and Brian - certainly there has been some large movements down in the 
>last few weeks. I just clicked on the baseline button on my Watchlist on 
>the the NetBroker site ( I didn't know that button existed but a good 
>feature) and noticed that some I had put on there had large falls over the 
>last 5 weeks (ADV -25%, Newcall -15%, RMG - 24% TEL -16% etc).
>
>Fortunately for me these have been only watched. Maybe some buying 
>opportunities coming up.
>
>On the other hand there has been some good gains (RNS +75%, GPG 15% and 
>even WHS +5%) and by picking the right ones the last month or so has been 
>pretty good for.
>
>I hope that some chatters did have a closer look at RNS because of my 
>regular touting of them over the last few months.
>
>Some research from "The Journal of Finance" shows how hard it is to keep 
>ahead all the time. Have a read =
>
>Individual investors who hold common stocks directly pay a tremendous 
>performance penalty for active trading. Of 66,465 households with accounts 
>at a large discount broker during 1991 to 1996, those that trade most earn 
>an annual return of 11.4 percent, while the market returns 17.9 percent. 
>The average household earns an annual return of 16.4 percent, tilts its 
>common stock investment toward high-beta, small, value stocks, and turns 
>over 75 percent of its portfolio annually. Overconfidence can explain high 
>trading levels and the resulting poor performance of individual investors. 
>Our central message is that trading is hazardous to your wealth.
>
>
>However read in context with something that was stated in that review that 
>Ben got us to read about PE's and valuing companies. It was shown that 
>holding a good parcel shares over time (5 years or so) generally 
>outperforms returns from bonds etc.
>
>Things will go up and down  these days on sentiment rather than any other 
>logical reason. However if your research or whatever lead to a decision to 
>buy into a company and you believe that nothing has fundamentally changed 
>then keep with it.
>
>Hopefully things will get better soon and we will all be a lot happier.
>
>Peter
>
>--- Move to a better address ---
>        + today freemail +
>     http://www.today.com.au
>
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